Social Security History

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Arthur Altmeyer Comments on Social Security

Arthur J. Altmeyer was chairman of the Social Security Board from 1937 to 1946, and a member of it from 1935. He was Commissioner for Social Security from 1946 to 1953.

Because of his continuing association with the social security program from its inception in 1935 until the organization of the Department of Health, Education, and Welfare in 1953, holding the top official post in the program for all but two of those years, Arthur Altmeyer became known as "Mr. Social Security." His leadership had profound effect on the program in this country.

In 1945, on the tenth anniversary of social security in the U.S., Mr. Altmeyer wrote an article for the old SURVEY GRAPHIC magazine titled "Ten Years of Social Security." Reviewed in the perspective of the program's twenty-fifth anniversary, it reveals the depth and breadth of his understanding of the philosophy behind the program, and of its application to life in this nation. The soundness of his thinking is evident from the validity today of what he wrote 15 years ago.

The editors of PUBLIC WELFARE selected excerpts from these observations so that readers might get some glimpses of how social security looked at this intervening point of its 25 years to the man who carried the greatest responsibility for it. Shortly before this was written, the U.S. Senate had just confirmed his appointment for his third six-year term as Chairman of the Social Security Board.

Clearly, social security substitutes hopes for fears. There are those among us who trust neither human nature nor democratic government; and who ten years ago believed that to cut down fear of losing a job as a motive force among men, would lead to a nation of loafers. There are those of us who do trust both human nature and democracy and hence believed that it is hope, not fear, that leads to high endeavor.

Now, as then, what you and I and Americans generally assume about man and his world tends to set our approach to social security--an approach which a decade of experience should modify if we take it to heart.

In formulating any philosophy of social security for ourselves, we must get our bearings by starting not ten but 500,000 years ago. I mean this seriously, because such a philosophy harks back to those age-old assumptions which have come down to us concerning the nature of man. Next, it depends on the relatively modern views we hold, one way or another, about the nature of human society and the nature of government.

If we get that far and our heads are still above water, we shall have to clarify our thinking on the economic order in which we believe human beings can be happiest; the forces we count on to make it tick, how they affect one another, how and whether social security fits into the pattern. And finally, for practical purposes, we have to decide what fiscal policies are likely to make ends meet.

. . . On the nature of man, we have a choice of several theories. I pin my faith to man's infinite perfectibility--

. . . On the nature of human society, we have to make up our minds whether the impulse to cooperate is stronger than the urge to combat. Here I choose the affirmative, despite two world wars since the turn of the century.

. . . On the nature of government, our view here in the United States was projected by Rousseau, Jefferson, Paine and others, when the prevailing theory was still the divine right of kings . . . Their thesis was that government exists for the governed and can endure only so long as it serves individuals reasonably well; that to survive, a democratic society must rely on hope and incentive, rather than fear and compulsion, to influence the conduct and aspirations of its citizens. In this perspective, social security has a place beside the civil liberties which safeguard our freedom.

. . . On the nature of the economic order, my assumption is that in this country we believe in a competitive economy with differential awards . . . Social security itself can, and in this country, does pay benefits in differing amounts to take account of differences in lost earnings. Yet at the same time it recognizes the actual or presumptive needs of beneficiaries.

If we can agree on the kind of economic order we want, we still have the difficult job of reckoning with the forces on which its success depends . . . Thus we must consider the nation's productivity in deciding what social security benefits will be paid and under what conditions. Consider also, in a competitive society their effect on wage rates, on mobility of workers, on the business cycle and full employment.

Mr. Altmeyer discusses basic objectives and says that his answer to what we are aiming at through social security is--

We are aiming at a minimum level of well-being for the people of this nation. Because we live in a money economy, that means the minimum of income and services essential to decent human existence.

He states as a corollary or modification of this fundamental concept--

Social security involves the principle that persons similarly situated shall be treated alike. In public assistance, this means that people with equal needs shall receive equal assistance; that needy children in a particular family should receive neither more nor less than those in any other family or any other community or state--whose needs are the same.

This principle also encompasses the idea that people with the same wage history, the same wage loss, and the same record of contributions shall receive the same amount of social insurance benefits.

In discussing rights to social security, Mr. Altmeyer writes--

The federal Social Security Act provides two kinds of programs--public assistance and social insurance. In the one, rights are conditioned on need; in the other, on wage loss. Yet they are of the same kind, although people sometimes hold that those arising out of contributions paid by a person, or on his behalf, are the more valid. I do not believe that such a distinction can be made. We do not say that the right of parents to send a youngster to public school depends on whether or not they pay direct taxes.

But contributions do affect the attitudes of beneficiaries, of legislators and the public generally. In our kind of economic society, the belief prevails that people should not only get what they earn but pay for what they get. It follows that the closer the connection between premiums and benefits, the more clearly are social security rights recognized. This explains the stigma often attached to the receipt of public assistance. Often the applicant himself feels that somehow or other he has failed to make the grade.

Given our competitive system, I don't know how we can avoid this dilemma. However, there is growing realization that an individual's need is usually due not to his own inadequacy, but to his economic and social environment, to bad luck or other fortuitous circumstances.

To me, it seems impossible to draw hard and fast lines between social insurance and public assistance. When people say that social insurance is something you get because you have paid for it, they forget that no social insurance program provides precisely what you have paid for. Social insurance benefits are weighted in favor of the low wage earner, in favor of the short-time, intermittent wage earner, in favor of persons with dependents.

Moreover, it is universally true that the structure of any social insurance system must be erected on the base of presumptive social needs rather than of exact private equities. The system cannot ignore individual equity but the primary consideration is social adequacy.

Discussing insurance and assistance, he says--

I am not arguing that we should abolish public assistance and turn everything into social insurance; much less that we should abolish social insurance and turn everything into public assistance. We should go on adapting these programs to achieve the common objective of social security--a minimum level of well-being. If we do that, their future will take care of itself. The program which proves more effective, more in harmony with the conscience of the people, will become dominant.

In the meantime--in peace years as in war years--it is vitally important to proceed on the assumption that social insurance should be our first line of domestic defense against want and fear. Its practical and hopeful values are time-tested and world-tested. Social insurance has the unique advantage that it automatically relates benefits to loss of earnings, automatically protects benefit rights, automatically provides the funds to pay benefits and automatically controls costs.

Public assistance is our essential second line of defense against misery and defeat among people who lack social insurance protection--or whose needs transcend the benefits that an insurance system provides.

In this paper written in 1945, Mr. Altmeyer raises and answers three questions as tests of adequacy of the program as it then stood--

1. Does the number of people insured under the various programs include all who should be protected?

At present it does not. Our most comprehensive program, the federal system of old age and survivors insurance, covers only about three fifths of the jobs in the country. The federal-state unemployment compensation program covers even less.

2. Taking account of wage levels and other factors, are we satisfied that the benefit amounts provided under the two existing forms of social insurance are adequate?

I would say, emphatically No. Neither in old age or unemployment insurance.

3. What are the great gaps in our present social insurance program?

They are the twin lack of protection against wage loss resulting from physical disability and against the cost of medical care. The two together constitute the Number 1 cause of human need in the United States except in a period of deep depression like the early Thirties--such as we expect never again to tolerate.

Overall. The outstanding achievement of the program cannot be measured in statistics. This is the common understanding it has spread of the strategic importance of a social security system to democracy, to economic progress--even to lasting peace.

Dire predictions that the program would lead to "regimentation," to Prussianism or communism--or what have you--failed to materialize. So too, have those advance fears that social security would sap our moral stamina and turn us into a nation of loafers. To the contrary, the war years have demonstrated that Americans want to work and will work when they have a chance.

There were rather natural misgivings, ten years ago, about the problems involved in administering a social security scheme in so vast and various a country as ours. These misgivings, also, have been dissipated by actual experience. To illustrate, the Social Security Board has been able to keep detailed, accurate records of workers taxable wages in some eighty million social security accounts--and this at an average account cost of around 17 cents a year. Carefully selected and trained, federal, state and local staffs, working under personnel merit systems, have overcome initial lack of experience and achieved a countrywide reputation for impartial and efficient administration.

As a people, we have come to realize, in the words Franklin D. Roosevelt used in the economic crisis of 1933, that what we have to fear is fear itself. That was two years before he initiated a social security system which has substituted hope and confidence for fear, and has helped us to have and to hold, individually and collectively, the independence and freedom we cherish.

I am optimistic enough to believe that progress in this second decade of social security in the United States will be at least equal the progress we have made in the first. But I am also confident that when these next ten years have rolled by, we shall still be talking about the inadequacy of the program in achieving minimum well-being.

Social security will always be a goal, never a finished thing, because human aspirations are infinitely expansible--just as human nature is infinitely perfectible.

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